Magazine article Marketing

ANALYSIS: Will Rover Cutbacks Hit the Brand?

Magazine article Marketing

ANALYSIS: Will Rover Cutbacks Hit the Brand?

Article excerpt

MG Rover has done well to reduce huge losses, but how will it be affected by an agency review?

MG Rover has been victim to an extended run of bad press. In addition to news that the company has given notice to its roster of marketing agencies (Marketing, April 10), last week's nationals announced that thousands of its workers at Longbridge have backed industrial action over pay and benefits.

The firm expects further losses for 2002, though they are unlikely to exceed pounds 100m. Given that it was haemorrhaging pounds 800m before Phoenix Venture Holdings bought it from BMW in 2000 and that it has halved that loss year on year without borrowing, it has belied the predictions of many sceptics.

But as it strives to break even in the next couple of years, what does the shift in the nature of its agency relationships mean for the brand?

If cost-cutting is central to the agenda, can it afford the reduction in brand profile that will accompany it?

Strong competition

MG Rover has to battle against not just the might of market leaders Ford and Vauxhall, but also the likes of Toyota and Skoda, both of which place enormous emphasis on branding and marketing.

Toyota, only slightly ahead of MG Rover in sales, doubled its advertising spend to pounds 65m last year, while Skoda continues to punch well above its weight. Its sales are less than half those of MG Rover's, but it has achieved cut-through with its self-deprecating reinvention.

So, with the agency reorganisation, how will MG Rover's ability to differentiate itself through its marketing be affected? Sales and marketing director John Sanders is adamant that there will be no cut in spend. 'Last week's news is not a prelude to reducing our marketing budget,' he says. 'Our spend for the first three months of this year is equivalent to the same period of last year. We're spending more on TV this year and will be back on TV in two weeks.'

Of the agencies affected by the review, some have come off better than others. ZenithOptimedia is the only agency that hasn't been served notice, while all print production stays with Boxer, some of whose staff will work at MG Rover.

M&C Saatchi's contract has not been renewed, but it will continue to work on Rover's advertising on a project basis. Sanders stresses that the external creative consultancy is vital to its marketing. 'We need objectivity and expertise,' he says. …

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